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Welcome to SQA, Little. Without seeing the context, it is hard to know exactly what the document means by "System Environment". Generally, it means everything the system interacts with. For a program running on a single computer, the system environment might include any other programs running on the computer, the operating system, all the computer's configuration settings, and the computer's physical characteristics.

From a tester's perspective, the system environment includes everything external to the software that might vary from one user to the next, or vary over time. If the system behaves differently depending on the amount of available memory, that's part of the system environment. If the system expects a message exchange over the network to finish within a certain amount of time, the network speed/reliability might be part of the system environment. If the system expects to use a certain amount of disk space, the disk capacity is part of the system environment. Those are simple examples, but I hope they get the point across.

By the way, a well-written SRS document will define vague terms like system environment. As a software engineer, if a term is not defined, you are entitled to ask the author to define it for you. In fact, when you read an SRS, part of your job is to identify ambiguities, mistakes, or conflicts that might lead to misunderstandings between you and the party who wants the software.

(Edit after seeing the document in question)

In the context of your document, the system environment is the set of things that the system interacts with rather than the things the system depends on. In your case, the system interacts with a set of people in different roles and an external system. The roles are relevant because each role interacts with the system in a different way. In your document, the roles are Author, Reader, Reviewer, and Editor.

Here is the link to the document. Maybe this will help cause I cant post an image
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Little ChildDec 12 '12 at 14:35

OK, I am preparing a mock SRS for my screencast prototype. The only primary user is me. There are no external systems/secondary users. What will the system environment look like? [in similar context as the document]
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Little ChildDec 12 '12 at 14:58

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I'm sorry, but (1) this doesn't have much to do with software quality assurance and testing and (2) I can't distinguish you from a college student looking for someone to do their homework for them. You might try asking for help at programmers.stackexchange.com.
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user246Dec 12 '12 at 15:18